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HB0769 amends Maryland’s residential foreclosure laws to add new restrictions and documentation requirements for foreclosing on owner-occupied residential property when the mortgage is “materially delinquent.” The bill defines a materially delinquent mortgage as one with no payments made by anyone other than the secured party in the preceding five years, excluding periods when foreclosure was barred by executive order or similar official action. For these loans, a secured party must send loan-related correspondence to the mortgagor each billing cycle, or alternatively serve a 90-day notice on a form developed by the Commissioner of Financial Regulation, before commencing foreclosure or a judicial sale.
The bill also changes what must be included with an order to docket or complaint to foreclose. The filing must now state whether the debt instrument is a materially delinquent mortgage and, if so, whether the secured party has satisfied the new statutory requirements. It also imposes a 10-year deadline from the claimed default date for commencing foreclosure, and requires additional documents when the foreclosing party acquired debt that had already been in default for five or more years before acquisition. The act further allows a mortgagor to raise laches as a defense in an action to enforce a materially delinquent mortgage, and authorizes courts to attribute delay to the secured party and grant appropriate relief.
In practical terms, the bill would add new procedural hurdles for lenders, servicers, and debt buyers seeking to foreclose on long-delinquent owner-occupied homes, while giving homeowners additional notice protections and a new equitable defense. It also expands the role of the Commissioner of Financial Regulation by allowing the Commissioner to prescribe forms and, by regulation, develop the notice form used for the alternative 90-day notice process.
The overall sentiment reflected in the bill’s movement is favorable, since the House committee reported it favorably with amendments and the House adopted it on second reading. No committee transcript or recorded vote details were provided, so there is no direct evidence of floor debate or opposition in the supplied materials. Based on the bill’s structure, the measure appears aimed at consumer protection and foreclosure process reform, with likely support from homeowner advocates and potential concern from mortgage lenders, servicers, and foreclosure practitioners over added compliance burdens and limits on enforcement.
The main point of contention is likely the balance between borrower protections and creditor enforcement rights. Supporters would view the bill as addressing stale, long-ignored mortgage defaults and requiring meaningful ongoing contact before foreclosure, while critics may argue that the new correspondence requirement, the 10-year filing limit, and the laches defense could complicate or delay legitimate foreclosure actions, especially for loans transferred after years of delinquency.
HB0769 would amend Article 7-105.1 of the Real Property Article and add new Section 7-105.19 to Maryland law, creating a special foreclosure framework for materially delinquent mortgages on owner-occupied residential property. It would require additional affidavits and disclosures in foreclosure filings, impose ongoing loan-related correspondence obligations, limit when foreclosure may proceed, and authorize a laches defense in these cases. The bill would directly affect mortgage lenders, servicers, trustees, debt buyers, homeowners, and the Commissioner of Financial Regulation.
The bill appears to have a generally favorable reception in the legislative process reflected here, as it received a favorable committee report with amendments and was adopted by the House on second reading. Because no transcript excerpts or vote breakdowns were provided, there is no detailed record of debate, but the measure’s advancement suggests at least procedural support. The policy direction is consistent with consumer-protection and foreclosure-oversight goals.
The likely controversy centers on whether the bill goes too far in restricting foreclosure on long-delinquent mortgages. Homeowner advocates would likely support the added notice requirements, the 10-year commencement limit, and the ability to raise laches, while lenders, servicers, and debt purchasers may object that these provisions create additional administrative burdens, increase litigation risk, and make it harder to enforce stale but valid debts. The requirement for monthly or cycle-based correspondence and the special treatment of debt acquired after long default are especially likely to draw concern from the creditor side.